IOCL reported a loss of Rs. 7,047 crore for Q2 2008. Last year during the same quarter it reported a profit of Rs. 3,818 crore.
How does a company like IOCL lose so much money? I thought petroleum business is the safest and people always mint money. I think I have to reconsider my views. Petrol is always referred as black gold and investing in gold does not hamper your chances of hitting the bull’s eye.
However, the Corporation’s Gross Turnover for the same period moved up by 46.5%, to Rs. 79,528 crore from Rs. 54,292 crore. The throughput of its refineries and pipelines network for the second quarter at 12.01 million tonnes and 14.27 million tonnes respectively was also higher than that of the corresponding quarter of the previous year.
In the period under review, oil prices spiraled to as high as $147 mid-July, but have since been falling and hovering around a little over $60.
According to IOCL, the under-recovery from the sale of subsidized transport fuels and cooking gas was Rs.12.27 billion in the second quarter. This is four times the under-realization of Rs.3.5 billion in the corresponding period last year. The average gross refining margin has also come down to $6.36 a barrel from $8.44 a barrel last year. Refining margins during the April-September 2008 are lower mainly due to negative impact of $4.08 per barrel on account of inventory valuation against $ nil (zero-dollar) during April-September 2007.
I think now the petroleum minister and the finance minister will try to boost the oil companies to ensure that they don’t go bankrupt. 🙂